Why Internal Auditors want every day to be Independence Day
Auditor independence refers to the independence of the auditor from parties that may have a financial interest in the business being audited. In the case of Internal Auditors, they work for, and primarily report to, the entity that they are auditing. In order to protect their integrity and have an objective approach to the audit process they need to have freedom from any circumstances that could threaten their ability to carry out the internal audit responsibilities in an unbiased and independent manner.
The KING III Report is considered one of the best Codes of Corporate Governance globally. This report specifically refers to two principles pertaining to independence of the Audit committee and its members;
- Principle 3.1:
The Board should ensure that the company has an effective and INDEPENDENT Audit Committee
- Principle 3.2:
Audit committee members should be suitably skilled and experienced INDEPENDENT non-executive directors
To ensure that both of these principles are adhered to it is important for Internal Auditors, and other Audit Committee members, to maintain the integrity of integrated reporting and internal financial controls as well as identify and manage the organisations financial risks. They should specifically look at placing larger emphasis on internal financial control monitoring and implement a technology platform, such as ACL, that can monitor these process and controls in an unobstructed manner with little to no human intervention for true independence.